You can't do both - or can you?

21 September 2005
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22 September 2005

Buyers are facing conflicting messages about the importance of efficiency savings and making their procurement policies sustainable. Anusha Bradley reports

Government initiatives for procurement are nothing new to public-sector buyers. Town hall and Whitehall purchasers have largely welcomed drives to reduce costs, encourage green practices and support local economic development.

But some buyers in both central and local government are now facing conflicting priorities.

For instance, achieving the OGC £14 billion cost-cutting targets, aggregating supply and getting value for money on economies of scale seem feasible, if challenging. However, doing this while diversifying supply bases to engage more small and ethnic minority businesses, fostering local economic development and procuring their goods and services more sustainably is a very tall order.

This month's National Audit Office (NAO) report on sustainable procurement (see News) highlights the conflict. And the study of the threat that public-sector cost cutting may present local authority suppliers, only reinforces the troubles purchasers face.

Roy Ayliffe, director of professional practice at CIPS, is involved with the government Sustainability Procurement Taskforce charged with developing a national sustainable procurement strategy for the whole public sector by April 2006 to try and solve the problems highlighted in the NAO review.

He believes public-sector procurement professionals are suffering from a lack of leadership, an issue that was also highlighted in the NAO report.

"What purchasing people want is a clear direction. They should be buying whatever is required to the best of their ability. They should not be the people who decide what criteria matter most. The reality is they do not get that clarity so they do not know what they are expected to achieve."

In his view, the answer is for the public sector to first ensure that effective professional procurement is well established in every organisation.

"When that is done, they should place sustainability at the required point in the pecking order within cost, quality and other criteria. "

John Belza, head of procurement and property services at the Department of Culture Media and Sport, shares the concerns: "There are so many initiatives coming out, it is difficult to determine the priority."

Peter Howarth, chief executive of the Society of Procurement Officers in Local Government(Sopo), admitted conflicting agendas created "conundrums" for public- sector buyers. But, he added, they could be an opportunity to show initiative.

"Purchasing managers should not wait for direction. They should be looking at the market in which they operate, including the local community and small businesses and how they can create opportunities to take part. It's not a one-way street. You have to think about what you get in return."

Liz Welton, head of procurement at Solihull Metropolitan Borough Council and deputy chair of Sopo, agrees: "There are ways to get around conflicts. But you need the right information to make the best decision." Solihull is now analysing its third-party spend to find out how much went to small firms.

"If you plan properly there will not be a conflict because you can plan what is best for the authority as a whole," she said.

This is echoed by Michael Wood, head of procurement at Haringey Borough Council, who believes the efficiency drive is compatible with social development goals.

"It's not a case of one size fits all. If you are purchasing temp workers, economies of scale does not come into it, because the issue is the quality of the worker and their proximity to the borough. You have to have multiple strategies for each type of procurement."

He added that small local firms were often more innovative, flexible and eager to adapt than larger corporations.

"We are increasingly using a policy where suppliers who fail to agree to be paid by BACS (automatic payment) will be excluded from tendering for council contracts. In the past six months our payments have risen from less than 5 per cent to over 50 per cent."

However, faced with busy workloads and limited resources many purchasers found they were too often cost-focused because they had concrete targets to meet. "What gets measured gets done," Belza said.


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